Accountancy, asked by isha0207, 8 months ago

cheque issued for life insurance premium of proprietor

Answers

Answered by Anonymous

Premium paid on the life policy of the proprietor should not be debited to insurance premium account. Premium paid on life policy of proprietor is not an expense in the normal course of business. It is an expense of personal nature any any expense for personal purpose is debited to drawings A/c.

Answered by prabinkumarbehera

Answer:

Being life insurance paid from cash/bank account, drawing account is debited because the insurance premium is paid for a person who is not related to business transaction. Any amount withdrawn from business for "personal use" is treated as drawing.

Premium paid on the life policy of the proprietor should be debited to Insurance Premium Account.

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